Ways to Help Clients Avoid Medicare’s IRMAA Surcharges

If you’re working with Medicare beneficiaries whose income is above a certain level, they will have to pay a surcharge on their Parts B and D premiums, known as the Medicare Income-Related Monthly Adjustment Amount (IRMAA). These surcharges are determined by the Social Security Administration; beneficiaries will receive a predetermination notice in the mail showing how it was calculated. Being hit with an IRMAA can be overwhelming for many clients, especially for those living on a fixed income, but what some beneficiaries are unaware of is that they can avoid these extra charges. One way that you can help your Medicare clients save some money is by understanding how Medicare’s IRMAA affects them, as well as by helping them avoid surcharges.

IRMAA Surchargescalculator with paper behind it on a desk

The income used to determine the IRMAA surcharge is the MAGI, or modified adjusted gross income, plus bond interest, from 2 years ago, meaning beneficiaries’ 2020 income will determine their IRMAA in 2022. So, if your client reports a higher MAGI in 2020, they will face the surcharge once the IRMAA brackets are released.

The Consumer Price index for Urban Consumers (CPI-U)

The good news for your clients is that legislation was passed in 2020 that will allow IRMAA brackets to be indexed to the consumer price index for urban consumers, or CPI-U, which means they will need to have a higher MAGI than in previous years to face the surcharges. The MAGIs for 2021 are $88,000 for individual filers, and $176,000 for joint filers, compared to 2020’s $87,000 for individuals and $174,000 for joint filers.

With all that being said, it’s important to make clear to your clients that they shouldn’t overspend at the beginning of their retirement, because the IRMAA surcharges are calculated based on a 2-year look-back period. So, even if their income drops significantly, they will still face these surcharges based on their income from previous years.

Your Clients Can Avoid IRMAA Surcharges By…

Considering Roth Conversions

If your client has an IRA, point out to them that, with a traditional IRA, there is a required minimum distribution (RMD) that has to be withdrawn at retirement age, but they can convert their IRA into a Roth IRA through a Roth conversion. Doing this will mean they will have to pay more in taxes and IRMAA surcharges for a short period, but will ultimately help them avoid being bumped into a higher IRMAA bracket later on, especially if they expect to report a higher income after withdrawing the RMD from their retirement accounts.

Giving To Charitiesillustration of money ten a hand with money bag and then present

If your client has a risk of being charged higher surcharges after withdrawing their RMD, they can choose to donate some of that money to charity; this donation is then considered taxable income, meaning they will avoid an increase in their MAGI, or being bumped up to a higher IRMAA bracket.

Considering Tax-Free Income

If your clients need extra money for living expenses, there are ways they can get extra income without the IRMAA surcharges: for example, they can opt for a reverse mortgage, or a home equity conversion mortgage. Another way to get tax-free income is by purchasing a life insurance policy with cash value; they can withdraw the cash value tax-free, which will help them avoid the IRMAA surcharges.

Appealing The Assessment

marriage certificate being cut by scissors
You can help your client appeal an assessment if there is a life changing event, such as a divorce, that changes their income.

If your client’s income 2 years ago was higher because they were working and now their income is lower because they have retired, or if there is an error in the IRS data, they can appeal their IRMAA assessment. There are also life-changing events that can make them eligible for an appeal, including:

  • Death of a spouse
  • Marriage
  • Divorce or annulment
  • Work reduction
  • Work stoppage
  • Loss of income from income-producing property
  • Loss or reduction of certain kinds of pension income

As the Medicare AEP opens up, you can help your clients save money by signing them up for a Medicare Supplement Plan, but you can also help them save money in other ways, such as by steering them towards ways to avoid IRMAA surcharges. Your clients will thank you, and will spread the word about how you go above and beyond to help them save as much money as possible.

Do’s and Don’ts Of Medicare Compliance

Before you can begin selling Medicare, you must first get your license to sell Medicare products, followed by certifications from carriers to sell Medicare Supplement Plans. But after all that, there is still one more thing to be aware of before you’re ready to sell. You need to know how to remain compliant with all the rules surrounding Medicare sales. In order to show your commitment to honesty and integrity, as well as to fulfill your legal duty and contractual obligations to sell Medicare, you have to be compliant with the following rules in all of your interactions with customers. Here are some simple do’s and don’ts to help you stay in compliance.

Medicare Compliance For Selling

When Selling Medicare:

DO:

caucasian man with a white button up sitting down filling out a form
Before contacting a lead, make sure to fill out a Scope of Appointment.
  • Make sure that you have Permission To Contact the prospect. Agents are not allowed to make unsolicited phone calls or send emails to prospects without having an opt-out option. In order to obtain permission to contact, you must use a lead provider like Benepath, who will have prospects/leads sign a form that says they agree to be contacted by an agent.
  • Complete a Scope Of Appointment form before each face-to-face appointment and/or one-on-one phone conversation. These forms outline exactly what you’ll be talking about with your client during a meeting. Per CMS, you must keep these forms on file for at least 10 years, even if your conversation did not end in a sale.
  • Report any suspected violations to the Medicare Compliance Hotline toll-free at 1-877-211-2290.

DON’T:

  • Engage in door-to-door marketing or sales
  • Use high pressure sales tactics
  • Engage in outbound telemarketing or email campaigns
  • Discuss with prospects any products that are not specified in their Scope of Appointment form
  • Engage in any discriminatory activities, such as conditional enrollment based on a prospect’s mental illness, physical illness, or disability

Medicare Compliance For Marketing

CMS also has regulations in place for marketing, educational events and sales event presentations.

DO:

illustration of a man in a suit talking to a group of people sitting down.
When marketing, you can distribute educational materials at an event that are not plan-specific as well as your business cards.
  • Wait until October 1 to begin marketing next year’s plans to potential customers
  • Distribute educational materials that are free of plan-specific information
  • Give out your business card and contact info
  • Collect Scope of Appointment forms
  • Hold your event in a public venue

DON’T:

  • Attempt to mislead your clients, willingly or unwillingly
  • Use the word free to describe $0 premiums
  • Serve meals at sales events
  • Pressure attendees at events to complete a sign in, it must be optional
  • Distribute plan-specific materials at an educational event (only do this at sales events)
  • Discuss any carrier-specific plans or benefits at educational events (only do this at sales events)
  • Cross-sell or promote health-related products at events

It is important that you follow these rules for Medicare compliance set by CMS, or you risk violations, and you may lose your ability to sell Medicare if you are reported. If you are looking for leads that have given permission to contact, Benepath will provide these leads exclusively to you. We give you exclusive real-time leads when you want them. To find out more information, call 866-368-0377.

What Does “Ready To Sell” Mean?

When it comes to selling Medicare Supplement Plans, you don’t have to limit yourself to the Open Enrollment Period! There are over 11,000 Baby Boomers turning 65 every day, which means not only opportunities to make a lot of sales, but also to earn a residual income. Selling Medicare Supplement Plans is a lucrative business that you can make a good living from, but before you begin selling, you must be “ready to sell.” Just because you are contracted with an insurance carrier does not necessarily mean that you’re “ready to sell.” There are certain steps that you have to take first.

computer mouse over the word license
Check your local state requirements to get licensed.

1. Get a Medicare License To Sell

Before completing any of the following certifications, you have to be properly licensed to sell Medicare products per your state’s Department of Insurance requirements. You must pass a state licensing exam and then apply for your license. Make sure to check with your state’s Department of Insurance for licensing requirements for your specific state.

2. Complete AHIP Certifications

America’s Health Insurance Plans, or AHIP, represents over 1,000 companies that offer insurance. In order to sell Medicare products, you will be required to complete AHIP training. The training is designed to educate agents on selling Medicare plans as well as on protecting seniors. When you receive this training, you will learn the basics of:

  • Medicare fee-for-service eligibility and benefits
  • Eligibility and coverage
  • The different types of Medicare plans
  • Compliance with marketing guidelines and enrollment procedures
  • How to detect and report fraud, waste, and abuse

Once you have received this training and are familiar with CMS regulations and guidelines, you will satisfy the requirement of insurers to sell their plans.

2. Complete Carrier Specific Certifications

illustration of a man in a suit motioning towards a certificate

Once you have completed the AHIP certification, the next step is to get certified with the insurance carriers you are going to work for. Some of the large carriers, such as Aetna and Humana, require individual product certifications in order to be able to sell their plans. You will be given three opportunities to pass their product certification test; if you fail all three times, then you will be unable to sell their products for one full year.

3. Finding Valuable Leads

Once you have completely passed all the certifications required, then the final step is to find valuable leads so you can start selling! The best way to do this is to work with Benepath, because we offer real-time, exclusive leads. Customers come to our site, they fill out our form indicating that they are interested in purchasing a Medicare Supplement Plan, and then the lead is immediately sent to you in real time. You will receive a live transfer call, as well as a text and an email; they will even be linked to your CRM.

What sets Benepath apart from other companies is that our exclusive leads always expect your call. We provide a custom thank you page for each one of our agents: each prospect will see your information including your picture, your logo, and a brief description of you or your agency. We provide you with better tools, more guidance, and the best leads available thanks to our constant researching and technological advancement.

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